ET Now: Do you think in the PSUs it is overdone? Stocks like IOB are available at 0.4-0.5 times book. Is it a good time to look into them or stay away from them?

Taher Badshah: The conditions are reasonably volatile. It is clearly going to remain pretty difficult to fathom the direction because on the one hand, there was a talk about changes in the provisioning norms and on the other hand, the government pushed to control lending rates. So that is not something which is getting very well received by the market unless the government supports it by easing CRR or SLR.

So, in the very near term, it is going to be volatile even for the PSU banks, but from a more medium to long-term perspective, some of these could merit attention simply based on the valuation comfort.

ET Now: What is your view on the way the depreciation of the currency is playing out on the IT stocks and do you think that it is a material beneficiary and can perhaps offset the overhang of the US Immigration Bill?

Taher Badshah: Yes, it is possible if the currency benefit to the IT companies comes along with an improvement in the global IT demand. IT spends in the near term probably should start looking up and more of the discretionary spends should come in a few quarters down the line. So if that were to happen, then clearly IT stocks will benefit led by both operational as well as the currency benefit.

This should be reasonably sufficient to offset some of the downside with regard to visa cost or probably the immigration laws. So we are reasonably positive on the IT sector going forward.

ET Now: DLF's debt woes have absolutely not receded. Do you think same is the case for some of the other companies and that while we might see an improvement in the overall interest rate environment, fundamentally nothing really changes?

Taher Badshah: Yes, it is a little disappointing that things did not pan out as expected in terms of DLF being able to restructure their balance sheet.

So that is clearly something which is now becoming more painful for this sector once again especially with the rupee at 60 to the dollar. So it is not really going to go away anytime soon.

At the same time, many of the other real estate firms are pretty okay in terms of the leverage now compared to what they were about two-three years ago having downsized operations, having cut down on new launches compared to the intensity a couple of years ago.

So it is not a complete disaster, but a few companies are going to feel the pain.

ET Now: Could you highlight two or three stocks in pharma pack that you think people can bet on for the long term?

Taher Badshah: We are more focussed on the companies which are more domestic oriented and where we see comfort on valuation. We see ability to grow our top line at about odd 20% coming about more easily to them compared to the others and some of these names are between the large and the midcap space.

We have specific companies like Divi's and Ipca Laboratories which look promising at current levels.

ET Now: Do you think some of the IT companies have captured the rupee benefits this quarter or will it largely be the volume led growth that we will see from a couple of companies?

Taher Badshah: You will probably not see much of the rupee-related benefit flow into this quarter. It will probably be more in the current quarter starting July. So the trajectory of growth in the IT sector as a whole will probably not be very different from the March quarter.

So we will probably be in for some significant change in the earnings growth, we will probably see dollar revenue growth in the vicinity of around 3% to 4% QoQ in this quarter at best.

ET Now: What is the view coming in on the cement pack? Do you believe that the capacity addition by some of the mid-tier companies as well as the overall muted demand outlook is going to play havoc in Q1 for some of the front liners?

Taher Badshah: Yes, at least the trends of the last quarter both in terms of prices as well as in terms of off take have not really been too good. So, clearly one would not probably be expecting very good numbers from the cement sector as a pack.

ET Now: And what about metals? Would you remain cautious?

Taher Badshah: Yes, until we do not really have a great positioning or view on the metal sector as such from a portfolio standpoint.

Until the time there is more action from the emerging markets, especially China and even to some extent India, we are now going to see as much of demand pick up as far as metal commodities go and that should probably also reflect itself on weaker stock prices in that sector.

ET Now: Do you think it makes sense for someone to put their money into the Reliances and ONGCs of the world?

Taher Badshah: I will think so. This is one of the sectors which will probably perform well driven by the current pace of reforms. So clearly both in the private sector side as well a couple of the PSU names, one should see better performance out of the oil and gas space.

Therefore, this sector merits attention from a medium to long-term perspective.